A proposed Internal Revenue Service rule requiring U.S. banks to report foreign depositors’ account information could prompt more deposit runs at banks in Houston and across Texas as foreign nationals fear that information could be used against them, bankers and trade groups say.

For decades, the U.S. financial system has profited from foreign depositors parking their cash in U.S. banks, boosted by a tax-haven image. Houston has seen a disproportionately large percentage of such deposits, specifically from Mexico.

But by the end of March, the IRS is expected to finalize a rule that would require banks to disclose personal account information of foreign deposits that receive interest payments to the IRS. The goal is to reel in tax dollars from those foreign depositors by trading key account information with other governments. Upon request, the IRS could relay the information to depositors’ homeland tax authorities without going through a bank.

For Mexican, South American and other Latino foreign national depositors, it could mean more than reprisals from their governments — it may mean their information potentially falls into the wrong hands, as it creeps along the countries’ insecure mail systems, putting them in danger of kidnapping or worse.

“They don’t want this information to be disseminated,” said Gerry Schwebel, executive vice president of the international division at IBC Bank, a Laredo-based bank with deep roots in Houston. “It’s not that they’re trying to keep a secret or doing anything wrong, it’s just that they are concerned for their safety.”

Schwebel said after recent Mexican media reports of the new rule, IBC Bank has been “getting phone calls immediately” from worried depositors.

The issue won’t just touch banks headquartered on the Mexican border. In recent years, populations of well-heeled Mexican foreign nationals have moved into the Houston area, such as The Woodlands.

Some Houston banks cater specifically to foreign-national depositors from Asia or Latino countries, and the recent surge of Mexican nationals moving to the Houston area means bank branches laden with foreign deposits could be vulnerable to a flight of capital, said Steve Scurlock, executive vice president of the Austin-based Independent Bankers Association of Texas.

And losing any deposits in the fragile economy could have substantial negative impacts on the banking sector, said Charles Cooper, commissioner of the Austin-based Texas Department of Banking.

After a low-participation informal survey last year to determine how much Texas banks held in foreign deposits, the institutions “would come back and say, ‘I have more of these (deposits) than I thought I had’,” Cooper said.

DOLLARS AT STAKE

Because banks report total foreign deposits rather than separate the foreign deposits of individuals and businesses, it’s difficult to estimate how many depositors’ dollars are at stake. Banks would have to pay for new systems to track that data.

But informal estimates of foreign deposits in the state’s banking industry vary from $3 billion to $20 billion, according to the Texas Department of Banking and the Texas Bankers Association, respectively. In lending power, using a typical formula that every dollar of deposits can be loaned up to nine times, that’s up to $180 billion for potential local businesses — a huge loss for the state if depositors pull their money, said Eric Sandberg, president and CEO of the Texas Bankers Association.

“Somebody really needs to figure out the economic impact it could have on border states like Texas,” said Geoff Greenwade, president and CEO of Houston-based Green Bank. “I think this could be a much larger dollar amount than anybody has imagined.”

Green Bank, said Greenwade, won’t be vulnerable to any major flight of capital because it has a low percentage of foreign deposits.

The IRS proposed the rule on Jan. 7, 2011, but throughout the past year worked on other banking regulations until this month, said Fran Mordi, vice president and senior tax counsel at the American Bankers Association in Washington, D.C.

The IRS, she said, originally pushed the rule a decade ago, but it failed because of industry opposition. New legislation prohibiting the rule, backed by senators from Texas and Florida, hasn’t gotten far, but could have an impact before the end of March, Mordi said, though she expects the IRS to implement the rule.

“I don’t think they’re going to back down,” she said.

The IRS argues that even if foreign depositors withdraw their money, the institutions they pursue would likely invest in the U.S. financial system, anyway.

And Mordi points out that the IRS won’t necessarily give other governments information about foreign depositors right away, but would do so on request.

Either way, depositors are worried the IRS will report the data immediately, and Texas banks are hearing about it.

“We are concerned ... with the personal security implications for our foreign clients and their families,” said Bill Helms, a Houston-based senior executive vice president and head of wealth management at BBVA Compass. “Some of them have expressed concern about the safety of their financial information once it leaves the security of the bank. Since this a concern for them, it’s a concern for us.”

For BBVA Compass, the Alabama-based subsidiary of Houston-based BBVA USA Bancshares Inc., nonresident deposits cover 6 percent of the bank’s total deposits, so any potential impact to the bank would be small, Helms said. BBVA USA is a subsidiary of the Spanish financial services giant Banco Bilbao Vizcaya Argentaria (NYSE: BBVA).

Still, if the rule is implemented, it could be a deterrent to Mexican investors, said Doug McCullough, an attorney with Phillips and Reiter LLC, a Houston law firm.

“If you’re a Mexican investor or business owner ... you might think twice about moving to the U.S.,” McCullough said.